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Questions surround Algoma Steel as stocks soar after rumours of takeover

By soome2000     Feb 16, 2007 in Business
In the last few years Algoma Steel has been through banruptcy and restructuring, their stock prices were almost worthless. Now the stock is soaring at over fifty dollars a share amid rumours of a takeover by Salzgitter AG.
Canada's market trading regulator wants the Ontario Securities Commission to investigate whether Algoma Steel Incorporated failed to disclose material information about takeover talks as its share price soared earlier this week.
Michael Prior, director of market surveillance at Market Regulation Services Inc. (RS), said RS staff contacted Algoma on Tuesday before the markets opened to ask about the large volume of trading on Monday and rumours of a pending takeover deal. The Globe and Mail reported Tuesday Algoma's shares were soaring on takeover rumours.
“We knew about the trading and we knew about the rumours, so we called the company,” Michael Prior said. “They said, ‘Nothing going on — business as usual.'”
The next afternoon Algoma contacted Market Regulation Services Inc. (RS) to report that it had been approached by a potential buyer and had entered into talks.
At 4:33 p.m. on Wednesday, RS halted trading in Algoma's shares and the company subsequently issued a press release disclosing the talks. Yesterday, Algoma said it was in talks with Salzgitter AG
Until late Wednesday, Algoma had made no public disclosure about any potential deal with Salzgitter AG, and had not released other news to explain the enormous price increase.
A huge company like Algoma Steel seems to think it can pull the wool over the eyes of the stock market. What kind of game is being played here?
More about Algoma, Steel, Takeover, Sault Ste Marie, Ontario